The Hindu Business Line : The morality of chasing the market dream

The US Treasury Secretary, Mr Henry Paulson, speaking to the Confederation of British Industry in London last month, commented that protectionism is morally wrong. "Giving in to the protectionist sentiment would be telling developing nations that while we have benefited from increased trade, we aren't going to allow them the same opportunity to develop," he said. Mr Paulson got his facts mixed up a bit, as students of economic history would know (see Ha-Joon Chang's book, Kicking Away the Ladder), developed nations of today maintained significant protections for their industry and agriculture during periods of their growth. Therefore, the moral issue really is that the developed world is denying the developing world the advantage the former had.

A former investment banker, Mr Paulson, must, however, be complimented for bringing morality into the discussion on trade.

When US Internet giants, Google and Yahoo!, decided to operate in China, they were told that access to some web sites would have to be blocked. The Chinese government, omnipotent and all knowing, decided to control what its citizens saw and read on the web. It was clear in the government's thinking that the Chinese should be able to access and read about expanding markets, outsourcing, and low-cost manufacturing, but reading about Tiananmen Square would hurt them. The two companies agreed, for they, perhaps, believed in the reasoning of the Chinese government, or perhaps the attraction of the Chinese market was irresistible.

When the rock music group, Rolling Stones, went to perform in China, they were told they could not sing four songs because the government found them offensive. The group said, "Fine, we have four hundred other songs that we can play." And so they had a successful tour. What are four songs out of hundreds, when the Chinese market is at stake?

Religion of markets

Welcome to the religion of amoral markets. The followers believe that the size of a market and access to it is more important than all other values of life. It does not matter if you do not believe in the policies of the Chinese government. It is the market that matters. After all, that is what drove US policy towards China and distinguished it from all other policies. Since Nixon's welcoming of China in 1972, the US has argued that the only way to make China less threatening is to engage it, talk to it, and slowly make it change its ways. Of course, that will never work with Cuba. No point talking to the Cubans, or engaging with them to make them change their ways. Cuba is too small; China has the big market.

Another reason for letting markets get the better of reason is the feigned policy of helplessness. What good is taking a stand against the Chinese government, is another line of argument. "It is too powerful and not about change its policies. I might as well enjoy its market."

Sacrificing principles

It is important to speculate on the extent to which individuals, firms, and governments have a responsibility to take a stand on issues where principles matter, but are conveniently sacrificed at the altar of markets. I doubt if Nehru thought about markets when he permitted the Dalai Lama and his followers to settle in India. Yet, when the Chinese President, Mr Hu Jintao, visited India in November, the government thought it important that the Tibetan activist, Mr Tenzin Tsundue, be confined to Dharamsala, so he does not do anything embarrassing like shout slogans or hold banners along the Mr Hu Jintao's route.

The government does not feel responsible to take a vocal moral stand on the continued incarceration of Ms Aung San Suu Kyi in Myanmar. One would think that a country that prides itself on being the world's largest democracy would give Myanmar more support.

The sense of values seems to have been abandoned even by students, who can afford to be idealistic and ignore markets till they get their degrees. I am referring to the students of Lady Shri Ram College, Ms Aung San Suu Kyi's alma mater. One would have expected that they would at least fast or demonstrate outside the embassy of Myanmar seeking the release of their famous Nobel Prize winning alumna. It is this predominance of the market and the underlying economics that is a major driving force of globalisation today.

Indispensable China

Everyone wants access to a big market, and there is no bigger market out there than China. Companies want to access its vast labour force as a cheap input for production, and also sell products to its huge and increasingly prosperous citizens. And all this, we are regularly told, is good for all of us since it leads to better things. Open markets, and access to them through free trade makes companies prosperous so they will expand and produce more and, therefore, employ more. Voila, the problem of poverty will gradually get solved.

As more products reach the market, scarcities will get eliminated, and voila, there will be no more hunger. As people get jobs and become consumers, they will not want their prosperity jeopardised, and voila, there will be no more wars with neighbours. As incomes rise, children get to schools rather than work in the farms, knowledge spreads, literacy improves, citizens will demand responsible governments. Voila, we have democracy.

Ergo, the government's only job is to keep markets and trade free. Free trade, its supporters argue, is the silver bullet promoted as having the potential to solve all the problems of the world. Free access to markets has become the focus and anyone who challenges the opening of markets to foreign investment is against all good things of life. Philosopher John Ralston Saul bemoans that trade is the most talked about subject, and corporate interests seem to be taking primacy over public goods.

There is more to globalisation than markets. Unless we figure that out , we are bound to be led down a valueless path. The pressure on companies to divest their operations and investments in South Africa certainly helped push that regime closer to abandoning their policy of apartheid. This is only the most recent example of where moral principles trounced the seduction of markets. After all, did not the ancients in India think of dharma in the same breath as artha among the four ends of man?

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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